Italy may need to reduce excess spending at a slower pace than planned to pay for campaign promises such as tax cuts and welfare after the economy unexpectedly shrank.
The extra fiscal space could come from revising up its forecasts of a deficit at 4.5% of gross domestic product for this year and 3.7% for 2024, according to people familiar with the issue who spoke on condition of anonymity because discussions are ongoing.
Prime Minister Giorgia Meloni promised tax cuts for lower-income families, as well as a general rationalization and reduction of levies in Italy’s byzantine tax system. She also vowed to continue helping households struggling with energy prices, and maintain current retirement norms and some other welfare benefits.
“It’s not an issue of debt or of lack of debt reduction for us,” he said, adding that Italy wants special consideration to be given to investments aimed at growth.
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